Canada's Oil Sands Companies To Share Research On Waste Ponds

Canada's major oil sands mining companies, under pressure from regulators and environmentalists, said Monday they've agreed to collaborate on technology to clean up the massive waste-water lakes created by their operations.

The agreement comes as Alberta's government is requiring oil sands miners to cut tailings production by 20% starting this year, increasing to a 50% annual reduction by 2012. Tailings ponds--a mixture of clay, water and toxic leftover oil--cover more than 50 square miles in northeastern Alberta and could take hundreds of years to be settle on their own.

All the current oil sands miners have submitted their own plans, using different technologies, to curtail the growth of the tailings ponds, which are projected to grow along with the rapid pace of the oil sands industry. Canada's is the largest exporter of oil to the U.S. Roughly half the country's oil production comes from the oil sands, and oil sands production is expected to double by the end of the decade.

Under the agreement, Canadian Natural Resources Ltd. (CNQ, CNQ.T), Imperial Oil Ltd. (IMO), Royal Dutch Shell PLC (RDSA, RDSA.LN), Suncor Energy Inc. (SU, SU.T) Syncrude Canada Ltd. (SYNCRUDE.YY), Total S.A. (TOT, FP.FR) and Teck Resources Ltd. (TCK, TCK.A.T) will share their tailings research and technology and "eliminate monetary and intellectual property barriers," according to a release.

Of the tailings technologies submitted by the miners, only Suncor's has met the original targets set by Alberta's government, and has been best regarded by environmental groups. Suncor Chief Executive Rick George has previously said he'd be willing to share Suncor's technology with other companies for a "nominal" fee that would offset some of the costs of Suncor's research.

A Suncor representative wasn't immediately available to comment on whether that fee would be completely lifted under this agreement.

Oil sands tailings ponds were the focus of intense criticism due to the deaths of thousands of waterfowl that have landed in the ponds and died from the toxic chemicals. Despite taking steps to prevent such accidents, several hundred more birds died in a Syncrude tailings pond in October.

Tailings ponds are only created by oil sands mining operations. Though most current production is mined, 80% of the oil sands are only recoverable using underground extraction methods that don't create tailings ponds, and an increasing amount is being mined this way by companies such as Cenovus Energy Inc. (CVE, CVE.T).

-By Edward Welsch, Dow Jones Newswires; 403-229-9095; edward.welsch@dowjones.com

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